attestation engagement borough of glen campbell€¦ · we examined the accompanying forms ms-965...

ATTESTATION ENGAGEMENT ____________

Borough of Glen Campbell

Indiana County, Pennsylvania 32-406

Liquid Fuels Tax Fund For the Period

January 1, 2013 to December 31, 2015

____________

November 2016

Independent Auditor’s Report

The Honorable Leslie Richards Secretary Department of Transportation Harrisburg, PA 17120 We examined the accompanying Forms MS-965 With Adjustments for the Liquid Fuels Tax Fund of the Borough of Glen Campbell, Indiana County, for the period January 1, 2013 to December 31, 2015. The municipality’s management is responsible for the Forms MS-965. Our responsibility is to express an opinion on the Forms MS-965 With Adjustments based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and the standards applicable to attestation engagements contained in Government Auditing Standards issued by the Comptroller General of the United States. An examination includes examining, on a test basis, evidence supporting the Borough of Glen Campbell, Indiana County’s Forms MS-965 for the period January 1, 2013 to December 31, 2015 and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. We are mandated by Section 403 of The Fiscal Code, 72 P.S. § 403, to audit each municipality’s Liquid Fuels Tax Fund to ensure that funds received are expended in accordance with applicable laws and regulations. Government Auditing Standards issued by the Comptroller General of the United States include attestation engagements as a separate type of audit. An attestation engagement performed pursuant to Government Auditing Standards involves additional standards that exceed the standards provided by the American Institute of Certified Public Accountants. Accordingly, this attestation engagement complies with both Government Auditing Standards and Section 403 of The Fiscal Code. Although management of the municipality provided us with a management representation letter on the date of our exit conference of August 29, 2016, held at the municipality, they did not respond to our request for an updated management representation letter including the disclosure of any subsequent events that affected the Forms MS-965 through the date of this report.

Independent Auditor’s Report (Continued) In our opinion, except for the possible effects of the matter described in the preceding paragraph, the Forms MS-965 With Adjustments present, in all material respects, the information required by the Pennsylvania Department of Transportation for the Liquid Fuels Tax Fund of the Borough of Glen Campbell, Indiana County, for the period January 1, 2013 to December 31, 2015, in conformity with the criteria set forth in Note 1. In accordance with Government Auditing Standards, we are required to report all deficiencies that are considered to be significant deficiencies or material weaknesses in internal control; fraud and noncompliance with provisions of laws or regulations that have a material effect on the Forms MS-965; and any other instances that warrant the attention of those charged with governance; noncompliance with provisions of contracts or grant agreements, and abuse that has a material effect on the Forms MS-965. We are also required to obtain and report the views of responsible officials concerning the findings, conclusions, and recommendations, as well as any planned corrective actions. We performed our examination to express an opinion on whether the Forms MS-965 are presented in accordance with the criteria described above and not for the purpose of expressing an opinion on internal control over reporting on the Forms MS-965 or on compliance and other matters; accordingly, we express no such opinions. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the Forms MS-965 will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over reporting on the Forms MS-965 was for the limited purpose of expressing an opinion on whether the Forms MS-965 are presented in accordance with the criteria described above and would not necessarily identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our engagement we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

As part of obtaining reasonable assurance about whether the Forms MS-965 are free from material misstatement, we performed tests of the Borough of Glen Campbell, Indiana County’s compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of amounts on the Forms MS-965. However, providing an opinion on compliance with those provisions was not an objective of our engagement, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Independent Auditor’s Report (Continued) This report is intended solely for the information and use of the Pennsylvania Department of Transportation and the management of the Borough of Glen Campbell, Indiana County, and is not intended to be and should not be used by anyone other than these specified parties. We appreciate the courtesy extended by the Borough of Glen Campbell, Indiana County, to us during the course of our examination. If you have any questions, please feel free to contact Michael B. Kashishian, CPA, CGAP, CFE, Director, Bureau of County Audits, at 717-787-1363.

September 13, 2016 Eugene A. DePasquale Auditor General

CONTENTS Page

Background ..........................................................................................................................1 Financial Section:

2013 Form MS-965 With Adjustments ............................................................................3 2014 Form MS-965 With Adjustments ............................................................................6 2015 Form MS-965 With Adjustments ............................................................................9 Notes To Forms MS-965 With Adjustments ..................................................................12

Summary Of Exit Conference ............................................................................................16 Report Distribution ............................................................................................................17

BOROUGH OF GLEN CAMPBELL INDIANA COUNTY

LIQUID FUELS TAX FUND BACKGROUND

FOR THE PERIOD JANUARY 1, 2013 TO DECEMBER 31, 2015

1

Background The Liquid Fuels Tax Municipal Allocation Law, Act 655 of 1956, as amended, (72 P.S. § 2615.5 et sec.), provides municipalities other than counties (townships, boroughs, cities, towns, home rule, and optional plan governments) with an annual allocation of liquid fuels taxes from the state’s Motor License Fund to be used for the maintenance and repair of streets, roads, and bridges for which the municipality is responsible. The allocation of these funds to municipalities is based: (1) 50 percent on the municipality’s proportion of local road mileage to the total local road mileage in the state, and (2) 50 percent on the proportion of a municipality’s population to the total population in the state. The Vehicle Code, Title 75 P.S. § 9511, provides municipalities with annual maintenance payments to be received from the Motor License Fund for functionally local highways that were transferred to a municipality from the Commonwealth of Pennsylvania. Each municipality must deposit their allocation of Liquid Fuels Tax funds and annual maintenance payments that it receives into a special fund called the Municipal Liquid Fuels Tax Fund or State Fund. A municipality may not deposit any other monies into this fund except when the municipality does not have enough money in the special fund to meet the payments called for by its current annual budget for road and bridge purposes. In this case, the municipality may borrow money or transfer money from its General Fund to its Liquid Fuels Tax Fund. The Department of Transportation has been given the regulatory authority for the administration of these funds. Department of Transportation’s Publication 9 includes the policies and procedures for the administration of Act 655, as amended, and the Liquid Fuels Tax Fund money. However, if there is a difference between Publication 9 and any legislation, the legislation shall govern. To qualify for the annual allocation of Liquid Fuels Tax funds, Publication 9 indicates that each municipality shall:

1. Submit annual reports (MS-965, Actual Use Report, MS-965P, Project and Miscellaneous Receipts, and MS-965S, Record of Checks).

2. Make deposits and payments or expenditures in compliance with Act 655 of 1956, as

amended. Failure to do so may result in not receiving allocations from PennDOT until all discrepancies are resolved. Publication 9, Section 2.6, includes information about investing Liquid Fuels Tax monies, using loan or bond proceeds, and types of receipts into the Liquid Fuels Tax Fund.


LIQUID FUELS TAX FUND BACKGROUND


2

Background (Continued)

3. Submit the Pennsylvania Department of Community and Economic Development’s (DCED) Report of Elected and Appointed Officials by January 31st and the Survey of Financial Condition By March 15th.

4. Insure resolution of all Contractor Responsibility Program (CRP) holds and blocks

imposed by the Department of Revenue and the Department of Labor and Industry.

5. Insure resolution of all reimbursements required as a result of audits performed by the Department of the Auditor General or monitoring reviews performed by the Department of Transportation’s Financial Consultants.


LIQUID FUELS TAX FUND 2013 FORM MS-965 – SECTION 1

WITH ADJUSTMENTS

3

Expenditure Summary Reported

Major equipment purchases -$ -$ -$ Minor equipment purchases - - - Computer/Computer related training - - - Agility projects - - - Cleaning streets and gutters - - - Winter maintenance services 9,594.09 - 9,594.09 Traffic control devices - - - Street lighting - - - Storm sewers and drains - - - Repairs of tools and machinery - - - Maintenance and repair of roads and bridges 2,348.04 - 2,348.04 Highway construction and rebuilding projects - - - Miscellaneous (Bank service charges) 6.00 - 6.00

Total (To Section 2, Line 5) 11,948.13$ -$ 11,948.13$

Adjustments Adjusted Amount

Notes to Forms MS-965 With Adjustments are an integral part of this report.



WITH ADJUSTMENTS

4

Fund Balance Reported

1. Balance, January 1, 2013 5,597.17$ -$ 5,597.17$

Receipts: 2. State allocation 11,259.76 - 11,259.76 2a. Turnback allocation 2,560.00 - 2,560.00 2b. Interest on investments (Note 3) 6.33 - 6.33 2c. Miscellaneous - - -

3. Total receipts 13,826.09 - 13,826.09

4. Total funds available 19,423.26 - 19,423.26

5. Expenditures (Section 1) 11,948.13 - 11,948.13

6. Balance, December 31, 2013 7,475.13$ -$ 7,475.13$





WITH ADJUSTMENTS

5

Equipment Balance Reported

1. Prior year equipment balance 5,597.17$ -$ 5,597.17$

2. Add: Current year equipment allocation (20% of Lines 2 + 2a, Section 2) 2,763.95 - 2,763.95

3. PENNDOT approved adjustments - - -

4. Total funds available for equipment acquisition 8,361.12 - 8,361.12

5. Less: Major equipment expenditures - - -

6. Remainder 8,361.12 - 8,361.12

7. Equipment balance available for subsequent year (Lesser of Line 6 or Section 2 balance, but not less than zero) 7,475.13$ -$ 7,475.13$





WITH ADJUSTMENTS

6


Major equipment purchases -$ -$ -$ Minor equipment purchases - - - Computer/Computer related training - - - Agility projects - - - Cleaning streets and gutters - - - Winter maintenance services 14,037.01 - 14,037.01 Traffic control devices - - - Street lighting - - - Storm sewers and drains - - - Repairs of tools and machinery - - - Maintenance and repair of roads and bridges 465.70 - 465.70 Highway construction and rebuilding projects - - - Miscellaneous (Bank service charges) 96.32 - 96.32






WITH ADJUSTMENTS

7


1. Balance, January 1, 2014 7,475.13$ -$ 7,475.13$


3. Total receipts 14,692.73 - 14,692.73








WITH ADJUSTMENTS

8







6. Remainder 10,412.61 - 10,412.61






WITH ADJUSTMENTS

9


Major equipment purchases -$ -$ -$ Minor equipment purchases - - - Computer/Computer related training - - - Agility projects - - - Cleaning streets and gutters 1,362.40 - 1,362.40 Winter maintenance services 14,904.18 - 14,904.18 Traffic control devices 1,603.65 - 1,603.65 Street lighting - - - Storm sewers and drains - - - Repairs of tools and machinery - - - Maintenance and repair of roads and bridges - - - Highway construction and rebuilding projects - - - Miscellaneous - - -






WITH ADJUSTMENTS

10


1. Balance, January 1, 2015 7,568.83$ -$ 7,568.83$


3. Total receipts 15,915.74 - 15,915.74








WITH ADJUSTMENTS

11







6. Remainder 10,751.40 - 10,751.40


Adjusted Amount Adjustments



LIQUID FUELS TAX FUND NOTES TO FORMS MS-965 WITH ADJUSTMENTS


12

1. Criteria

Section 1 This section of Form MS-965 With Adjustments provides a summary of Liquid Fuels Tax Fund expenditures by category. Categories requiring explanation include:

• Major equipment purchases are purchases of road machinery and road equipment with varying yearly costs in excess of the amounts indicated below:

2012 2013 2014 2015/2016

$10,000.00 $10,200.00 $10,300.00 $10,500.00

• Minor equipment purchases are purchases of road machinery and road equipment

with varying yearly costs, or less, than the amounts indicated below:

2012 2013 2014 2015/2016

$10,000.00 $10,200.00 $10,300.00 $10,500.00

• Agility projects are exchanges of services with the Department of Transportation. Section 2 This section of Form MS-965 With Adjustments provides information on the fund balance. Categories requiring explanation include:

• The state allocation was received from the Department of Transportation during the

first week in April of each year through 2013. Municipalities began receiving the state allocation in March of each year beginning in 2014. The amount the municipality receives is based half on its population and half on its road mileage.

• The turnback allocation was received from the Department of Transportation

during the first week in April of each year through 2013. Municipalities began receiving the turnback allocation in March of each year beginning in 2014. A municipality receives a yearly turnback allocation based on road mileage for all roads that were transferred to the municipality from the Commonwealth of Pennsylvania through the Highway Transfer Program.




13

1. Criteria (Continued) Section 2 (Continued)

• Expenditures include the total transferred from Section 1.

Section 3 This section of Form MS-965 With Adjustments determines if the municipality expended Liquid Fuels Tax Fund money in excess of the permissible amount for equipment and the balance that the municipality may carry forward for the purchase of equipment to the subsequent year. Department of Transportation Publication 9 requires that the amount expended for equipment purchases in a given year not exceed the sum of the equipment balance carried forward from the previous year and 20 percent of the current year’s Liquid Fuels Tax Fund allocation and, if applicable, 20 percent of the turnback allocation plus other Department of Transportation approved adjustments. If the municipality spent in excess of the amount listed on Line 4, the excess must be reimbursed to the Liquid Fuels Tax Fund. The equipment balance to be carried forward for the subsequent year is the lesser of the amount on Line 6 or the ending fund balance on Line 6 of Section 2, but not less than zero. Basis Of Presentation The financial activities of the municipality are accounted for in separate funds. The Liquid Fuels Tax Fund is used to account for state aid revenues from the Pennsylvania Department of Transportation used primarily for building and improving local roads and bridges. The Forms MS-965 have been prepared in accordance with reporting requirements prescribed by the Pennsylvania Department of Transportation as a result of the Fuels Tax Act 655, dated 1956 and as amended, which does not constitute a complete presentation of the entity’s assets, liabilities, expenses, and fund balance. Accordingly, the presentation of Forms MS-965 With Adjustments is restricted to the Liquid Fuels Tax Fund, which represents a segment of the entity.




14

1. Criteria (Continued) Basis Of Accounting The accompanying Forms MS-965 With Adjustments are prepared in accordance with reporting requirements prescribed by the Pennsylvania Department of Transportation. Under this method, revenues are recognized when received and expenditures are recorded when paid. General Fixed Assets General fixed assets are recognized as expenditures at the time of purchase. No depreciation has been provided on the heavy equipment used to maintain and repair roads and bridges.

2. Deposits

The Borough Code, Title 53 P.S. § 46316, authorizes the borough to deposit its funds in the following:

• Deposits in savings accounts or time deposits, other than certificates of deposit or share accounts of institutions having their principal place of business in the Commonwealth of Pennsylvania and insured by the Federal Deposit Insurance Corporation (FDIC) or other like insurance. For any amount above the insured maximum, the depository shall pledge approved collateral.

• Certificates of deposit purchased from institutions insured by the FDIC or other

like insurance to the extent that such accounts are so insured. For any amounts in excess of the insured maximum, such deposits shall be collateralized by a pledge or assignment of assets. Certificates of deposit may not exceed 20 percent of a bank’s total capital surplus or 20 percent of a savings and loan or savings bank’s assets minus liabilities.

Deposits consist of receipts and deposits in a financial institution. Pennsylvania statutes require all deposits to be insured and, for any amount above the insured maximum, to be secured with approved collateral as defined.




15

2. Deposits (Continued)

There were no deposits exposed to custodial credit risk as of December 31, 2015. Custodial credit risk, as defined by GASB No. 40, includes deposits that are not covered by depository insurance and the deposits are uncollateralized, collateralized with securities held by the pledging financial institution, or collateralized with securities held by the pledging financial institution’s trust department or agent but not in the municipality’s name. Fund Balance The fund balance as of December 31, 2015, consists of the following:

Cash $5,614.34 3. Interest On Investments

Our examination disclosed that the municipality deposited idle liquid fuels tax money in an interest-bearing account which earned $6.33 during 2013, $5.33 during 2014, and $2.85 during 2015, thus providing additional funds for road maintenance and repairs.


LIQUID FUELS TAX FUND SUMMARY OF EXIT CONFERENCE


16

An exit conference was held August 29, 2016. Those participating were: BOROUGH OF GLEN CAMPBELL Ms. Debra Cessna, Secretary/Treasurer DEPARTMENT OF THE AUDITOR GENERAL Mr. John Walkauskas, Auditor The results of the examination were presented and discussed in their entirety.


LIQUID FUELS TAX FUND REPORT DISTRIBUTION


17

This report was initially distributed to:

The Honorable Leslie Richards Secretary

Department of Transportation

Borough of Glen Campbell Indiana County P. O. Box 43

440 Glenwood Avenue Glen Campbell, PA 15742

The Honorable David B. Lucas President of Council

Ms. Debra Cessna Secretary/Treasurer

This report is a matter of public record and is available online at www.PaAuditor.gov. Media questions about the report can be directed to the Pennsylvania Department of the Auditor General, Office of Communications, 229 Finance Building, Harrisburg, PA 17120; via email to: [email protected].

http://www.paauditor.gov./

mailto:[email protected]

attestation engagement borough of glen campbell€¦ · we examined the accompanying forms ms-965...

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